A month has gone by since the last earnings report for TriMas Corporation (TRS - Free Report) . Shares have added about 2.1% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is TRS due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
TriMas' Q1 Earnings & Revenues Beat Estimates
TriMas delivered adjusted earnings of 41 cents per share in first-quarter 2018, up 37% from 30 cents reported in the prior-year period. Earnings beat the Zacks Consensus Estimate of 38 cents. The company benefited from its efforts to capitalize on increased demand through its refocused commercial efforts as well as streamlined cost structure.
On a reported basis, TriMas reported earnings per share of 53 cents compared with 15 cents in first-quarter 2017.
TriMas generated revenues of $217 million in the quarter, outpacing the Zacks Consensus Estimate of $209 million. Revenues also went up 9% year over year.
Cost and Margins
Cost of sales increased 6% year over year to $157 million in the first quarter. Gross profit increased 17% year over year to $60 million. Gross margin expanded 190 basis points (bps) to 28%.
Selling, general and administrative expenses escalated 58% year over year to $25 million. Adjusted operating profit improved 17% to $28 million from the prior-year quarter. Adjusted operating margin advanced 90 bps year over year to 13% in the quarter.
Packaging: Net sales increased 9% year over year to $88.2 million as a result of higher sales of Rieke’s entire primary end markets served. Adjusted operating profit increased 5% year over year to $19.6 million.
Aerospace: Net sales inched up 1% year-over-year to $45.8 million from $45.4 million recorded in the year-earlier quarter. Higher sales of machined products and continued solid demand for fasteners were negated by the impact of TriMas’ decision to exit less profitable components and the benefit realized in first quarter 2017 of reductions against past due orders. The segment reported adjusted operating profit of $5.1 million, flat year over year as continued performance improvement actions were offset by less favorable product sales mix.
Specialty Products: The segment reported revenues of $83.1 million, a 13% improvement from $73.5 million recorded in the prior-year quarter, primarily driven by higher sales levels of all brands resulting from refocused commercial efforts and capturing increased end market demand. Adjusted operating profit climbed 34% year over year to $10.7 million on higher sales levels and continued realignment actions.
TriMas reported cash and cash equivalents of $36.7 million as of Mar 31, 2018, up from $27.6 million as of Dec 31, 2017. Cash flow from operations came in at $16.2 million in first-quarter 2018 compared with $22 million recorded in the last year quarter. At the end of the reported quarter, net debt was approximately $265 million, down from $276 million as of Dec 31, 2017.
TriMas maintained 2018 outlook. The company estimates that organic sales will increase around 3% from the prior year and earnings per share at $1.60-$1.75. Free cash flow in 2018 is expected to be greater than 120% of net income.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower.
At this time, TRS has a great Growth Score of A, though it is lagging a lot on the momentum front with a C. Following the exact same course, the stock was also allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Interestingly, TRS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.